Collective bargain hunt! The world’s number one hedge fund Bridgewater adds 75% of Ali’s position, MSCI said that MSCI China has entered the final stage of the bear market

As the disclosure of the U.S. stock holdings report by institutional investors at the end of the first quarter draws to a close, the holdings of Chinese concept stocks by global investment institutions have surfaced. Data show that the world’s number one hedge fund Bridgewater aggressively increased its positions in Chinese concept stocks in the first quarter. Chinese experts Mingji International “buy the bottom” Pinduoduo and Shell Holdings.

Freshwater Spring (Hong Kong), a top private equity firm in Hong Kong, is JinkoSolar, the leader in new PV modules. As the epidemic improves, some global investment institutions have expressed “bullish” views on the Chinese market. Morgan Stanley said that MSCI China has entered the final stage of the bear market, and Fidelity International also expressed its optimism about the cost-effectiveness of China’s market allocation.

The world’s number one hedge fund adds 75% to Alibaba

Bridgewater is one of some global institutions firmly bullish amid the volatile Chinese market in 2022.

Bridgewater recently filed a Form 13F with the SEC for its holdings at the end of the first quarter. Bridgewater, the world’s largest hedge fund, will lead the way in 2022. The pure alpha strategy with a volatility of 18% has recorded returns of more than 20% in the first four months of this year.

Let’s take a look at Bridgewater Fund’s U.S. stock holdings in the first quarter.

As of March 31, the market value of Bridgewater’s U.S. stock portfolio was $24.8 billion, compared with $17.2 billion at the end of the previous quarter. As a global macro strategy fund, Bridgewater’s U.S. stock portfolio only accounts for a small portion of its total assets.

In the first quarter, Bridgewater’s U.S. stock portfolio has changed a lot from the end of the previous quarter.

As of the end of the first quarter, the emerging market ETF VWO became the No. 1 heavyweight stock after increasing its position by 35%. Three of the top ten holdings are ETFs that track emerging market indices, and all three emerging market ETFs were massively increased in the first quarter.

In addition, in the first quarter, Bridgewater Fund increased its position in the sixth-largest stock Alibaba by 75%, the 20th largest stock in Pinduoduo by 85%, and the 24th largest stock in Baidu by 50%.

In addition to ETFs, as of the end of the first quarter, the top 25 heavyweight stocks of Bridgewater were mainly consumer and medical and health stocks. Among the top 25 heavyweight stocks, Medtronic was newly opened. The largest increase in the top 25 heavyweight stocks is Pfizer, with an increase of 352%.

In this round of U.S. inflation, Bridgewater predicted early on that inflation would be persistent. In early 2022, Bridgewater made a judgment: U.S. inflation is mainly driven by demand rather than caused by supply destruction. The conflict between Russia and Ukraine had not yet erupted. Many investment institutions hope that inflation will ease after the supply chain is relieved. But because Bridgewater believes that inflation is caused by demand, inflation will continue even if the supply side improves.

Overweight emerging markets is also an investment move by Bridgewater that is different from other institutions. This may be based on Bridgewater’s concern that the US economy is difficult to soft landing.

From the perspective of emerging market index performance alone, since 2022, the net value of VWO (tracking emerging market index) has dropped by 17.47%. Bridgewater’s holdings of emerging market indices may be a hedge against risk and to diversify risk in the U.S. market.

Bridgewater’s latest research said that it is increasingly difficult for the United States to achieve two goals at the same time: one is to control inflation at a certain level, and the other is to achieve a certain level of economic growth.

This is also the reason why Bridgewater believes that it still needs to invest in China. As a configuration to diversify risks in the United States, the Chinese market is necessary.

In the first quarter, Bridgewater Fund increased its positions in Chinese concept stocks including Alibaba and Pinduoduo. It is understood that private equity funds in Bridgewater have also achieved positive returns so far. This is due to the all-weather allocation of Bridgewater, and with the cooperation of stocks and bonds, in the context of the substantial adjustment of A-shares, it still achieved positive returns.

Mingji International Plus Warehouse Shells 116%

Another Chinese expert “Mingji International” also increased positions in some Chinese concept stocks in the first quarter.

As of the end of the first quarter of 2022, the market value of the U.S. stock portfolio was $722 million, compared with $958 million at the end of the previous quarter.

As of the end of the first quarter, Yum China was the largest stock in the US stock portfolio, which increased by 4% in the first quarter. The fourth-largest stock in the US stock portfolio is Pinduoduo, which increased its position by 60% in the first quarter. The fifth-largest stock in the U.S. stock portfolio is JD.com. The 11th largest stock in the US stock portfolio is Bilibili, which increased its position by 45% in the first quarter, and the 14th largest stock is Shell, which increased its position by 116% in the first quarter.

In the first quarter, Mingji International reduced its holdings in BeiGene.

Mingji International is a boutique-style investment institution. It has invested in China for a long time, and its overseas Chinese funds have performed well. This institution often appears in the top ten shareholder lists of some small and medium-cap listed companies. This also shows its style. Many global institutions invest in blue-chip white horses focused on China, and Mingji International also conducts in-depth research on small and medium-sized caps.

Recently, investment strategist Andy Rothman believes that there is currently a relatively optimistic attitude towards China. Rothman first believes that the epidemic situation in China is expected to improve soon. First of all, the absolute number of infected people is not large (lower than the United States and some European countries). Second, most infections are asymptomatic, which means there is no run on medical resources. Finally, although the number of infections has grown faster in the past period, it has recently declined.

Rothman expects strong supportive policies from subsequent governments. He believes that China’s economy will enter a rebound cycle after the third quarter. In particular, he believes that the real estate industry will also enter a rebound cycle. Rothman believes that last year’s downturn in the real estate industry was based on policy expectations, not driven by supply and demand data.

Freshwater Spring (Hong Kong) and JinkoSolar (ADR)

Freshwater (Hong Kong), the Hong Kong subsidiary of the top domestic private equity firm Freshwater, also recently submitted its US stock portfolio position to the SEC. As of March 31, the regulated assets of Freshwater Springs (Hong Kong) were US$6.9 billion, but the US stock portfolio was only tens of millions of US dollars. The scale of regulated assets includes the total fund under management (US stocks, investments in other asset classes in other markets) and leveraged financing, which is greater than or equal to the asset management scale (AUM).

Data shows that Freshwater Springs emptied 34 stocks in the first quarter, and nearly 1 new stock was added. The new one is JinkoSolar, the world leader in photovoltaic modules. And the new entry is the first big holding stock. Under the background of high inflation in Europe and the United States and energy security being put on the agenda, new energy and clean energy have gathered consensus again.

In the first quarter, Danshui Spring (Hong Kong) also increased its holdings of Shell Holdings. Reduced holdings of Pinduoduo and Tuya Technology.

A few days ago, Danshuiquan issued a view saying that it is appropriate to find the opportunities bred in pessimism at present. Danshuiquan said in the research report that if the Chinese economy is compared to a spring, it is currently under a lot of pressure, but when the epidemic is under control, there will no longer be marginal new pressures at the industry policy level, and the “spring” itself has the flexibility to recover , superimposed policy stimulus will be more conducive to economic recovery. When evaluating investment opportunities, try to avoid the misunderstanding that the higher the up, the more optimistic, and the lower the down, the more pessimistic.

Danshuiquan pointed out that it should focus on outstanding leading enterprises to ensure solid investment and research actions. Taking the first quarterly report as an observation window, we can see that under the same difficult environment faced by the industry, the leading enterprises have demonstrated strong resilience and laid a solid foundation for the flexibility of operating performance after the difficult period. In a complex market environment, it is even more necessary to keep the investment and research actions unchanged. The essence is to solidify the investment and research process in accordance with scientific working methods, and to improve the quality of research and decision-making.

US-priced boutique Ariel invests in Baidu

Ariel Investments, a Chicago-based value-investing boutique, added to its third-biggest holding in Baidu in the first quarter. The market value of Ariel’s investment portfolio in U.S. stocks is about $11.273 billion, which is basically the same as the $11.863 billion at the end of the previous quarter. In the first quarter, it bought 4 new stocks, increased its holdings of 57 stocks, emptied 2 stocks, and reduced its holdings of 44 stocks. The top ten heavyweight stocks accounted for about 30%.

Super long-term “tech catcher” Berkey adds to Ctrip

According to information from Gurufocus, a U.S. stock position tracking website, Berji, an ultra-long-term investment institution, built a new warehouse in the first quarter of “Roblox”, the first stock of Yuan Universe, and the Chinese concept stocks slightly increased their positions in Ctrip.

Berkey is a world-renowned ultra-long-term investment institution. It is committed to discovering and investing in the most competitive, innovative and high-quality companies with growth efficiency on a global scale. The holding period is more than five years; its average investment holding period is close to 10. year.

According to the 13F report, at present, Berkey’s US stock portfolio holds a total of 498 stocks with total assets of about 142.6 billion US dollars. Among the holding industries, cyclical consumption accounted for 26.32%; health care accounted for 23.81%; technology industry accounted for 21.47%.

The latest 13F report disclosed that the company has significantly opened up positions in Roblox, the first stock of “Metaverse”, the old software company Adobe; gradually reduced its position in Tesla; among the Chinese concept stocks, slightly increased positions in Huirong Technology, Ctrip and other stocks; and good future.

Morgan Stanley: MSCI China Index enters end of bear market

Statistics from fund position tracker Copley Fund Research pointed out that compared with the high point in 2020, as of the end of the first quarter of 2022, the allocation of global emerging market funds to China (including the mainland and Hong Kong) has decreased. However, the differences between different funds are large, and there are still many well-known institutions’ funds that have adopted a high allocation attitude. In addition, some international institutions have recently believed that the situation has improved, and the Chinese market is ushering in the dawn.

For example, on May 10, Morgan Stanley issued a report on A-share companies saying that after a continuous decline, the MSCI China Index may be approaching the end of a bear market.

MSCI cited data to point out that from February 17, 2021 to May 6, 2022, the MSCI China Index fell 51% in absolute terms, and MSCI China fell 32% relative to the MSCI Emerging Markets Index.

However, Morgan Stanley believes that the final stage of the bear market is full of twists and turns: the macro economy is weakened by the epidemic, and corporate profits are under pressure; at the same time, the Fed’s contractionary policy and international geopolitical tensions will affect MSCI China’s recent performance.

Compared with ADR and Hong Kong stocks, Morgan Stanley is optimistic about A-shares, because A-shares can benefit from potential easing policies in the short term and are consistent with long-term growth opportunities (IT, industry, green economy, etc.) The recently officially launched individual pension scheme also supports institutional participation in the market. Based on this, Morgan Stanley expressed its optimism about the following thematic opportunities: high-quality stocks that were oversold in the previous period, the launch of repurchase-related companies, and infrastructure-related sectors.

Almost at the same time, Fidelity International also issued a bullish report, arguing that the price-performance ratio of the current Chinese market allocation has emerged.

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